Bank of England raises interest rates to 4% — its first hike since 2023 — and warns inflation could reach about 5%
The Bank of England raised its Bank Rate by a quarter point to 4% on Thursday 5 November 2026 — the first increase since August 2023 — with its Monetary Policy Committee voting 8–1 and the lone dissenter, Catherine Mann, wanting a bigger rise to 4.25%. The Bank said UK inflation, which reached 3.5% in September, is now expected to rise to around 5% by the middle of next year as the Middle East conflict keeps energy prices high, and Governor Andrew Bailey said he could see the argument for a further increase if the inflation risks do not soften. The Bank's next decision is on 17 December.
Key points
- Bank Rate rises a quarter point to 4% from 3.75% — the first increase since August 2023 (MPC vote 8–1).
- The dissenter, Catherine Mann, wanted a bigger rise to 4.25%, citing "non-linear inflation risks" after CPI hit 3.5% in September.
- The Bank now expects inflation to reach about 5% by the middle of next year; in its adverse oil scenario, 6.2% in late 2027.
- Bailey: he can see the argument for a further increase if inflation risks do not soften. Next decision: 17 December.
Watch: the moment itself
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Video: Bank of England · Watch on YouTube
What happened
The Bank had been under pressure for weeks. Inflation rose to 3.5% in September, its highest in 11 months, while Ofgem's energy price cap rose 3.6% on 1 October and is forecast to rise a further 22% in January — household energy costs transmitting the Middle East conflict's oil and gas prices directly into the inflation figures the Bank targets. A Reuters poll before the decision had expected a quarter-point rise but had expected the dissent to come from a member wanting to hold, not from Mann wanting more.
The rise starts the Bank down a path Reuters notes its main peers have already taken, and it lands on a new prime minister, Andy Burnham, who has sought to ease cost-of-living pressures: higher Bank Rate pushes against that aim through mortgage and borrowing costs, even as the Bank argues that letting inflation run would cost households more. The Bank also lifted its growth forecasts — 1.6% this year and 1.3% next — notably stronger than the Office for Budget Responsibility predicted last week.
Claim by claim
Why this label: Verified from the decision's own reporting in agreement: Reuters' report of the announcement (carried by WDSM, read in this run) and Business Day's report of the same decision agree on the rate, the vote and the first-since-2023 framing; the Bank published its Monetary Policy Summary and minutes at 12:00 on 5 November (its own events listing). A central bank's rate decision is its own act — the low-risk gate is met on the Bank's announcement as reported by two independent outlets.
On the ladder: a claim earns Verified from primary evidence, or from two independent sources that do not copy each other.
Why this label: Verified from Reuters' account of the minutes and of the individual members' published views (read in this run), in agreement with Business Day. Mann's reasoning is quoted from the minutes as reported — her stated position, carried as such.
On the ladder: a claim earns Verified from primary evidence, or from two independent sources that do not copy each other.
Why this label: All figures are the Bank's own published forecasts as reported by Reuters (read in this run) — forecasts stated as the Bank's projections, not as outcomes. The September CPI figure of 3.5% is the official statistic the Bank cites.
On the ladder: a claim earns Verified from primary evidence, or from two independent sources that do not copy each other.
Show all claims (1 more)
Why this label: Verified as the principal's own words: Bailey's statements are quoted from the members' published views carried by Reuters (read in this run) — under the principal's-own-words rule, that he said them is verified by his own statement. Whether a further increase actually happens is a separate, unsettled question and sits in the don't-know list, not in this claim.
On the ladder: a claim earns Verified from primary evidence, or from two independent sources that do not copy each other.
What we know / what we don't know yet
What we know
- The decision and the vote: 4%, 8–1, announced Thursday 5 November 2026.
- The Bank's central forecast: inflation peaking at an average 4.8% in the second quarter of next year.
- The date of the next decision: 17 December 2026.
What we don't know yet
- Whether the Committee raises again in December — Bailey's words leave it conditional on energy prices and inflation dynamics, and no vote has been taken.
- Whether inflation actually peaks near 5%: the Bank's own adverse scenario reaches 6.2%, and Bailey has said good news on the Iran conflict could bring the peak in somewhat below 5% — the path depends on a war the Bank does not control.
- What the rise does to mortgage and savings rates in practice — lenders set those themselves, and the pass-through had not been reported when this page was published.
Why it matters
Bank Rate is the price of money for the whole UK economy: it feeds mortgage rates, business loans and savings returns within weeks. A first rise in more than three years, driven by a war-driven energy shock rather than a booming economy, is the hardest kind of tightening — borrowing costs rise precisely because households are already being squeezed — and the Bank's own forecasts say the squeeze peaks next year, not this one.
Background
The Bank of England's last rate increase before this one, when inflation was still more than triple its 2% target (Reuters).
The Monetary Policy Committee votes 6–3 to hold rates, divided over how much evidence of second-round inflation effects is enough (Reuters). UK CPI inflation comes in at 3.5% for September, an 11-month high.
Ofgem's energy price cap rises 3.6% for a typical household, with a further rise of about 22% forecast for January.
Update history
No silent edits. Every change is written here, with its time.
- Latest
Published (crawler queue #1691, CNBC; worked with Reuters' decision and minutes reporting and Business Day, read in this run). JUDGE AUDIT: (1) headline, slug, SEO title and summary all state the same outcome — a rise to 4%, the first since 2023, with inflation expected near 5%; no qualifier is dropped anywhere. (2) The decision, vote, dissent and forecasts are Verified on the Bank's announcement as reported by two independent outlets; the governor's words are verified as his own statement, and whether rates rise again is kept in the don't-know list rather than stated. (3) Every number — 4%, 3.75%, 8–1, 4.25%, 3.5%, 4.8%, 6.2%, $130/$100 oil, 1.6%/1.3% growth — traces to the Reuters or Business Day reporting named in the claims. (6) Photo is the Bank's Threadneedle Street building, labelled a file photo in its alt text; the video is the Bank of England's own Monetary Policy Report press conference on its official YouTube channel, oEmbed-verified (HTTP 200) in this run. Translations: headline, summary and take labels in all 13 non-English languages at publish.